Investment companies increasingly find it necessary to include background checks as part of their due diligence of target and investee companies. Private Equity firms look to verify and validate the personal and professional backgrounds of the Board members of the company in to which they are looking to invest. Likewise, Hedge Fund of Funds require a detailed understanding of both the hedge funds in to which they are looking to invest, and also the actual hedge fund managers themselves. At the end of the day, these are the people who are responsible for generating the return that investment companies are seeking – failing to check their backgrounds would be an act of professional incompetence on the part of the investment companies.
But who checks the checkers? The quality of background check assessments, of both individuals and corporations, varies hugely from country to country and from background check supplier to supplier. For example, most background check suppliers rely on 3rd party vendors on the ground in countries around the world, to search court records and conduct other local investigations on their behalf. Very often, the relationship between these vendors and the parent background check supplier is tenuous to say the least, with no contractual arrangements in place and no defined background check process that is being followed. Yet investment companies sometimes invest billions of dollars on the back of background check reports that are cobbled together based on inaccurate and misleading information gathered in this way.
The above is just one example of the operational incompetence of some background check suppliers.
H.D. Management acts on behalf of investment companies, conducting operational background check suppliers assessments to help ensure that the background check reports are worth the paper they are written on.
One example of our work can be found in the following link:
We were contracted by a leading Hedge Fund of Funds (HFOF) and asked to conduct a global assessment of background check suppliers, the purpose of which was to identify a background check supplier who could undertake credible background checks on the behalf of the HFOF. We were given a blank sheet of paper with which to start. On the back of that we delivered the project as defined in the brief below.